It's Brian Preston, the money guy, restoring order to your financial chaos, retirement,

investing, taxes. You've got financial questions, he's got financial answers. It's Brian Preston,

the money guy. This is cool. Next question is from Brad,

Brian. He says, I'm a 1099 contractor, but my boss, okay, we'll talk about that in a second.

I'm a 1099 contractor, but my boss has suggested me become an LLC for tax purposes. I'm making about

45,000 this year. Is there a certain income level that I should consider transitioning to an LLC?

I think this is really his question. When does corporate structure matter and why does it matter?

How do I know that I've actually hit that point or I've not hit that point just yet?

There's all kinds of things going on there with your question, Brad. First of all,

when you're a 1099 contractor, you don't have bosses. You are an independent contractor,

so you're your own boss. That's the first question, because this is something back when I used to

work in public accounting and we talked about trucking over the road truckers.

Is it you have a lot of businesses that are set up to where they actually have employees,

but they don't want to pay the payroll taxes. They set everybody up as independent contractors.

The way the IRS always comes in and goes, do you control this person's schedule? Are you their boss?

If you are, the ought to be W2 employees. The reason you want to be a W2 versus an independent

contractor is that that 7.65% that goes towards FICA, Social Security, and Medicare taxes

half will be paid by the employer and then the other half will be paid by you, the employee,

versus when you're a 1099, you pay all 15.3%, plus the income taxes. It's just something to be

aware of. That's a nerdy answer to now get to what he's really asking. I would think 45,000,

because why do you want to be what's different between a sole proprietor? That's what you are when

you just pay 1099, you do no planning. You just go file a schedule seat on your personal tax

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